35ac Approval: 35ac 1(ii) & 35ac 1(iii) for NGO

The Income Tax
Act has certain provisions which offer tax benefits to the "donors".
All NGOs should avail the advantage of these provisions to attract potential
donors. Section 35AC is one of such sections. If an NGO succeeds in getting
35AC approval for its projects then it stands a very good chance of mobilising
funds from the corporate and the business sector. Business houses making
contribution to such approved projects are allowed the benefits of deducting
such contribution as expenditure.

Any scientific
research association / organization which has its objects, carrying out the
scientific research or social science research or social science research can
be approved under section 35 I(ii) and 35 I(iii) in accordance with the
guidelines and other conditions as may be notified in the official gazette of
the central government. The donor will receive 175% weighted deduction on the
donated amount as per amendment by the Finance Act 2010.

The Central Government has constituted a
National Committee to identify projects and schemes to be notified under
section 35AC, such committee normally consists of eminent persons. All NGOs are
entitled to apply to the National Committee to get its projects or schemes
approved.

WHERE THE APPLICATION IS TO BE MADE

The application for approval by the
National Committee should be made to the Secretary, National Committee for
Promotion of Social & Economic Welfare, Dept. of Revenue, Govt. of India,
North Block, New Delhi – 110 001.

Application:-

The application
for approval under section 35 1 (ii) / 35 1 (iii) of IT Act 1961 may be
submitted to the CIT/ DIT- IT of the jurisdiction of the assessee association
along with following information in prescribed form.

=> List of assets / facilities owned used for
scientific research / Social science research by the applicant.

=> Details of past research projects undertaken
by the applicant, such as research projects completed/ underway/ any
publication of research projects.

=> Past research activities such as whether any
new product/process developed, approved, any product of import
substitution.

=> Patents filed and details of the filing.

=> Earnings from such patents etc

=> Proposed research project to be undertaken.

=> List of the donors and amount received as
donations

=> Total cost of the project approved by the
National Committee.

=> Amount utilized in such research activities,

CERTIFICATE TO BE ISSUED TO THE DONOR

=>
All approved NGOs are required to issue a certificate to the donor for
all contributions & receipts under section 35AC.

=>
This certificate will enable the donor to claim exemption from its
taxable income. Further, the NGOs should also send an Annual Report to
the National Committee indicating the progress of the work relating to
the project/scheme and the following information in respect of each
contributor:

i) name of the contributors & their addresses.

ii) PAN.

iii) amount of contributions.

iv) the project/scheme for which the contribution is made.

v) total amount of contribution received during the year.

vi) total cost of the project approved by the National Committee.

Such
Annual Report should reach the National Committee by 30th June,
following the financial year in which the amount is received.